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Tuesday, July 31, 2012

The Most Common Crowdfunding Mistakes

Crowdfunding campaigns for artistic projects are all the rage these days, but many of them fail when they probably shouldn't. Let's look at some of the most common mistakes you can make in a crowdfunding campaign.

The goal is ill defined. If potential investors aren't sure exactly what you're trying to do with the money you raise, they most likely won't invest.

No audience to begin with. Although it's not out of the question that you can raise money for a music venture without an existing fan base, it really takes an outstanding idea, great promotion and an excellent campaign to do so. If you have an existing fan base, the bar is set a little lower in that you're already a known quantity.

The goal amount is unrealistic. If you're trying to raise $200,000 to record an album, you better have a good explanation as to where the money is going. Major label budgets are down to $40k and 50k these days, and everyone knows that most musicians have their own recording gear, so a large amount has to be justified. Remember, if you can't reach your goal, your campaign automatically fails.

The investment rewards are unappealing. If you have an investment tier of $100 and all the investor gets for that is a CD with a "thank you," you're going to fail. You have to make the rewards well worth the risk.

The price points are wrong. If your minimum investment begins at $100, you'll probably fail. Most investment comes from much small $25 and $50 denominations, but don't be afraid to include a $10 tier as well. Every little bit counts, and the more people that are on board, the more moment the project will have.

The campaign is too long. Most successful campaigns last for 30 days. If you think that you'll raise more money with a longer campaign, the facts don't bear that out. The first few days usually shows a big bump, followed by about 25 days of a lull, then there's a big investment push at the end. A longer campaign just stalls your momentum for little gain.

No pitch video. Most successful campaigns include an effective pitch video. It doesn't have to fancy, but it has to be sincere and get the point across of exactly what your idea is, and what the rewards will be for investing.

No call to action. Just like with all selling, ask for the sale in the video and elsewhere in the campaign.

Crowdfunding for music projects has a pretty good rate of success, with well over 50% being funded. Don't take that number for granted though, because a great campaign still needs a great idea, a lot of planning and a little luck to be a success.

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This is the music industry blog by best selling audio and music business author Bobby Owsinski. Published every weekday, Music 3.0 looks at the new music industry and how social media plays a part in it.